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Gift Letter For A Home Loan

Are your parents willing to gift you the money for the deposit?

Which lenders will accept a gifted deposit? Call us on 1300 889 743 or fill in our free assessment form.

Why might the bank need a gift letter?

A gift letter is a letter from your parents or a close relative confirming that they are giving you a gift for you to use as a deposit to buy a property.

Lenders need to confirm the source of a borrower’s deposit to make sure that they are not borrowing the deposit off credit cards or a personal loan.

Some Australian lenders will not lend to people who have received their deposit as a gift. Please read our page about home loans with a gifted deposit for more information about the loans available to you.

Quick find:

Gift letter template 1 - Standard

This is a normal letter template as used by most lenders. If your lender has specifically asked for a statutory declaration then please use the 2nd template.

1/10/2014

To Whom It May Concern:

Re: John Smith

I confirm that I am giving my son John Smith an unconditional gift of $50,000 for him to use to buy a property. This gift is not repayable or refundable.

Should you require any additional information please do not hesitate to contact me on 02 0000 0000.

Regards,

(SIGN)

Adam Smith
1 George St Sydney NSW 2000

If a Home Loan Experts mortgage broker is currently arranging your loan, please both fax and mail the letter to us using the fax number and address on our contact us page.

Which lenders will accept a gifted deposit? Call us on 1300 889 743 or enquire online.

Gift letter template 2 - Statutory Declaration

Use this letter if your lender has specifically asked for a statutory declaration to confirm the gifted deposit. Please note that some lenders such as Suncorp have their own statutory declaration template. If you are unsure what template to use, please call us on 1300 889 743 to discuss.

Statutory Declaration

I/We: Adam Smith

Of: 1 George St Sydney

in the State of New South Wales, do solemnly and sincerely declare as follows:

I will give my son John Smith a total of $50,000 to assist him to purchase a property. This gift is unconditional, non repayable and non refundable.

And I/we make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Oaths Act, 1900 (as amended).

Subscribed and declared at Sydney NSW

This 1st day of January 2014

(SIGN)
Adam Smith

Before me:
(SIGN)
Name: (Name of JP)
Justice of the Peace #: 123456

If a Home Loan Experts mortgage broker is currently arranging your loan, please both fax and mail the letter to us using the fax number and address on our contact us page.

Please read our page about gift deposit home loans as only a select few lenders can accept this type of loan.

Gift letter template 3 – Family loan

In the event that the gift is repayable, then this is assessed as a borrowed deposit by the banks. If you get a loan from a family to help you buy a property then only a select few banks will consider your application. Please contact us if you are having trouble finding a lender.

1/10/2014

To Whom It May Concern:

Re: John Smith

I confirm that I am advancing a loan to my son John Smith to assist him in buying a property. The details of this loan are as follows:

  • Loan amount $50,000
  • No interest is payable.
  • Repayments of $1,000 / month
  • The loan will be secured by a caveat behind the loan by ABC bank / The loan will be unsecured.

Should you require any additional information please do not hesitate to contact me on 02 0000 0000.

Regards,

(SIGN)

Adam Smith
1 George St Sydney NSW 2000

If a Home Loan Experts mortgage broker is currently arranging your loan, please both fax and mail the letter to us using the fax number and address on our contact us page.

Which lenders will accept a gifted deposit? Call us on 1300 889 743 or complete our free assessment form.

Gift letter template 4 – Guarantor support

If your parents have decided to use a property they own as additional security for your loan then we may require a letter from them just confirming that they understand what you are doing. This is particularly important if you are consolidating debts while buying a property. The letter must be signed by all guarantors.

1/10/2014

To Whom It May Concern:

Re: John Smith

We are well aware of our son John’s financial position and believe he is now responsible enough to handle the commitment of buying a property. He has been paying his current debts on time and is never short of money so we are happy to help him refinance his debts into the new loan when buying a property.

Should you require any additional information please do not hesitate to contact me on 02 0000 0000.

Regards,

(SIGN)

Tom & Jane Smith
1 George St Sydney NSW 2000

What catches people out?

Did you know that some banks have a policy which allows them to accept a gift as a deposit, yet their credit scoring system assesses these applications in a very harsh way. As a result, many people get declined.

Secondly, some people are actually borrowing their deposit from their parents and intend to repay it later. This is a loan, not a gift, and it isn’t accepted by every lender.

The key is to apply with a lender that sees people with a gift as a low risk borrower.

Bank requirements for gift letters

Australian lenders have strict requirements for letters confirming the source of a deposit and will often ask for a letter to be amended if it does not meet their requirements.

Your gift letter should be:

  • Dated
  • Signed
  • Contain the name of the person who signed the letter
  • Contain the name of the person receiving the gift
  • Confirm the gift amount
  • Confirm that the gift is “unconditional, non repayable and non refundable”

Most lenders will accept a faxed copy but some will require your mortgage broker to hold the original on file.

Which bank can approve your loan?

If you need the services of a mortgage broker to help get your loan approved then why not talk to us at Home Loan Experts? We know which lenders can accept a gifted deposit and which require genuine savings.

Please call us on 1300 889 743 or complete our free assessment form to speak to one of our experienced staff.

  • Scarlett Williams

    Hi, I have submitted my application in NAB. For this, my uncle has deposited $20,000 in my savings account, can I show that as a gift from him and prepare a letter accordingly on the earlier date?

  • Hi Scarlett,

    If the 20,000 is an unconditional gift from your uncle, you can ask him to write a gift letter addressing to NAB.

    If NAB charges you a higher rate due to a small deposit or declines your loan due to a lack of genuine savings then let us know and we’ll compare other options for you.
    https://www.homeloanexperts.com.au/genuine-savings/

  • KW Davies

    Aside from a gifted deposit and a gift letter, what other requirements will I need to meet to get a 95% home loan?

  • Hello KW Davies,

    To qualify for a 95% home loan, you’re also generally required to have a clean credit history, stable employment, good income, reasonable asset position, minimal debts and to be buying a standard property in a good location. Or you can simply enquire online to find out if you qualify:
    https://www.homeloanexperts.com.au/free-quote/

  • Katey N

    Hello. I received a gifted deposit 5 months ago, and I can provide the letter to prove it if needed. I actually put it into my bank account immediately and didn’t use it at all. When I applied, the bank didn’t approve my application because they didn’t consider it to be genuine savings. Help!

  • Hey Katey N,

    There are people who have done this before – held a gift in their account for several months to have it counted as genuine savings. However, having it counted as genuine savings isn’t always this simple. While this can convince lenders that you’re good with your money, they may still question why your savings haven’t increased or why there was a large lump sum deposited into your account or simply not accept them as in your case.

    However, there may be no need to try to convince your lender because we know a few lenders that may be able to approve your loan anyway. The key is to apply with a lender that can accept your situation so please call 1300 889 743 if you want to discuss this with one of our credit specialists.